I went on the Today Programme this morning to talk about the new Mortgage Market Review Proposals. Flick your eye down the listand you'll be amazed at the idea that anyone has to tell banks this stuff. You would have thought it would be pretty obvious that it might not be a good idea to lend people hundreds of thousands of pounds without checking they have a repayment plan beyond waiting for house prices to rise and selling the house.
And you would have thought that all mortgage affordability checks would take into account the fact that interest rates might rise and house prices fall. Still ,the fact that these measures might be introduced now will make not the slightest bit of difference to today's mortgage market. Why? Because lenders have temporarily at least learnt their lesson. Their huge shortage of capital and new understanding of the risks inherent in their business means that they do all this stuff already: they only lend to people who they are almost certain will pay back and they cover themselves by leaving a hefty margin for error in the form of low loan to values.
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